Slight Increase in Card Loan Interest Rates at the End of Last Year... "Increase in Medium and Low Credit Customers"

7 Major Credit Card Companies' Card Loans
Average Interest Rate Rises for Two Consecutive Months
As of December Last Year, 13.32%

Photo by Yonhap News

[Asia Economy Reporter Ki Ha-young] The average interest rate on card loans (long-term loans) has risen for two consecutive months. As financial authorities tighten bank loans, which are the primary financial institutions, the demand for card loans among middle- and low-credit customers who urgently need cash has increased, leading to a rise in the average interest rate.

According to the disclosure by the Credit Finance Association on the 22nd, as of the end of December last year, the average interest rates (operating prices) for card loans based on standard grades at seven specialized card companies (Shinhan, Samsung, KB Kookmin, Hyundai, Lotte, Woori, Hana Card) ranged from 11.61% to 14.27%. The average for the seven companies was 13.32%, up 0.06 percentage points from 13.26% the previous month.

Among the seven card companies, interest rates rose at five companies: Shinhan, KB Kookmin, Hyundai, Lotte, and Woori Card, while Samsung and Hana Card saw decreases. Woori Card had the lowest rate at 11.61%, up 0.36 percentage points from the previous month. Following that, Hyundai Card rose 0.12 percentage points to 12.85%, and Hana Card fell 0.16 percentage points to 13.21%. KB Kookmin Card and Lotte Card recorded 13.22% and 13.89%, respectively, rising 0.02 and 0.37 percentage points from the previous month. Shinhan Card and Samsung Card, ranked first and second in the industry, recorded 14.17% (up 0.07 percentage points) and 14.27% (down 0.36 percentage points), respectively. The relatively higher average interest rates of Woori Card and Lotte Card raised the average for specialized card companies.

The average interest rate on card loans at specialized card companies has been rising for two months. The average for the seven companies was 13.24% in October last year, 13.26% in November, and 13.32% in December, showing a slight increase. This is the opposite of the trend from August to October, when the average was declining.

The average interest rate applied to high-credit customers in grades 1-2 also rose for the first time at the end of last year. Woori Card, which has many high-credit grade customers, offered an interest rate of 6.64% last month, providing the lowest rate to grade 1-2 customers for five consecutive months, but this was 0.19 percentage points higher than the previous month. Since the disclosure of standard grades began in June last year, the interest rates offered to grades 1-2 had been steadily decreasing until this first increase. Woori Card explained that this was due to a slight decrease in grade 1-2 customers for its Woo Card Minus Loan, which targets creditworthy members. The interest rate applied to grades 9-10 was 18.80%, with Gyeongnam Bank Card offering the lowest rate. This is 0.1 percentage points lower than the 18.90% offered by DGB Daegu Bank Card the previous month.

An industry official said, "Due to banks tightening loans, customers urgently needing money for jeonse deposits or living expenses seem to have reluctantly turned to card loans," adding, "As the number of middle- and low-credit customers among them increased, the average interest rate on card loans also rose."

This content was produced with the assistance of AI translation services.